Our discussion this morning of brexit. Id like to open by remembering to go back a year and a half ago june 16 and the uk public vote in brexit felt like a tectonic shift and it was a major change with consequences that were both farreaching and unclear. Brexit changes everything but how . Businesses, institutions and policymakers have been looking that ever since. The study that will talk about today looks at the impossible outcomes of what they mean for our Economic Policy and preparation. Im delighted to see many friends of the Wilson Center here today and i will introduce our expert panel. My idea is that we will hear from charlie about the results of the study and turn this over to michelle for comment and then ask fran and howard to weigh in. Who are these people you ask . Charlie is the Vice President of international a brand and hes a former Us Ambassador to greece and was a distinguished state Department Career including postings as possible Deputy Assistant secretary for europe, minister for affairs in london in the European Union. In iraq eservice quinine or for economic transition from 2007 to 2008. Fran is at a staff member at the Rand Corporation. Shes also a distinguished fellow at the Atlantic Council and Senior Advisor at laguardia associates. Until january 2017 she served as Vice President for European Union and special initiatives at the council. Howard is senior economist at Rand Corporation, director of brand initiated research and a professor at the party rand graduate school. He specializes in economics and Economics National security and is written on so many varied studies that i am hardpressed to find something he hasnt written on. Michelle, next to him, is art non rand expert and we claim her as one of our own at the Wilson Center. She is a fellow in our Global Europe Program and professor at the school and correlate their european and russian studies program. With that, i know youre waiting for the main presentation and im turning it over to charlie thank you very much, robert. Robin didnt introduce herself i will mention shes just back from having our top political jobs at the us embassy in london and knows quite a bit about the subject herself. I hope she will intervene in the discussion. Id like to also thank Wilson Center for hosting us today and look forward to our discussion after words. The Rand Corporation mission is to help improve policy and decisionmaking for research and analysis. We are a nonprofit, nonpartisan Research Organization and as such would take no position on brexit itself. British voters who decided to undertake this journey through the study we seek to provide independent and impartial evidencebased without any doubt one of the biggest moments of the uk in europe after the end of world war ii. Our goal is to understand the economic consequences of brexit. To undertake this study we assembled a team of economists and researchers from rand us and rams affiliate in europe, rand europe and as already introduced our fran and howard. Fran took the lead in the political analysis as the study and howard is our resident expert on Foreign Direct Investment. Funding for the report was provided by donors in independent research and Development Provisions of brand contracts with the department of defense funded research centers. In addition to grants from the Iconic Foundation supported the work on game theory in relation to brexit, as well as the outreach and dissemination activities were undertaken. What we produce is a new passive and honest looks at the economic under different trade scenarios for the uk, the eu and also for the us. This not only provides a thorough Economic Analysis but uses the game theory insight to explain the strategies parties are choosing. The Economic Impact scenarios and gave the reanalysis our study helps explain the significant of the decision reached by the eu just last week to move to phase two in the negotiations with the uk. The discussion of the unions future economic relationship with the uk. Our base case could be considered the no deal case that is the uk leaves the eu in the 19 without reaching any agreement for preferential trade remaining members of the eu. We call this [inaudible] because in such a circumstance the eu and the us and every other country wto found tariff rates for goods and established market rates for services. We then compare the following four scenarios to the space case. First, the successful negotiation of the uk eu trade agreements, pre trade agreement which the uk is seeking. Second, the creation of a us, uk reaching agreement which the uk has also begun to discuss with trade though it cannot begin formally discussing trade negotiations until it withdrawals third, the creation of the uk, eu, us Free Trade Agreement based on the model of the us, eu, transplant trade and Investment Partnership or t tip which was under negotiation between 2013 and 2016 for now frozen in political. An extended transition period between the eu and the uk trade arrangements do not change materially but other non Tariff Barriers to trade progressively come into effect. Now for the sake of completeness we also assess the Economic Impact of breeze called soft brexit scenarios. Unlike the hard brexit scenarios these scenarios assume the uk will maintain access to the eu Single Market in some way and apply donna tariff toward the rest of the world. Three such soft brexit scenarios are one the norwegian model which would involve the uk becoming a member of the European Economic area. To this model which have British Trade with the eu be based on a series of sectorial bilateral arrangements to give the uk wide Market Access but obligated to apply eu standards and regulations. Finally and eu uk Customs Union like the one eu has turkey. For each of the post [inaudible] for each scenario we analyze the effect of changes three kinds of trade costs. One changes in tariffs. To immediate changes in nonTariff Barriers such as imposing rules of origin, customs, measures and standards and a third, likely changes in nonTariff Barriers over time through the progressive emergence of regulation. What did you find from this Economic Analysis . The big take away is that the uk will be economically worse off outside of the eu under most possible scenarios. The key question for the uk is how much, how much worse off libby. The option of leaving the eu with no deal in simply applying the wto rules and its clear that no deal is the worst deal with the british economy plus brexit. Our Analysis Shows that trading under wto rules would reduce the gdp by about 5 after ten years which is a loss of 140 billion. This would be approximately 45 of the uks expected Economic Growth over the decade. Under no deal the eu would also lose out economically by nowhere near the same proportion as the uk. The Economic Loss the eu after ten years would be about 0. 7 of its overall gdp which is a loss of 97 billion. The uk would lose more proportionally and more absolutely than the eu under no deal scenario. Why would the no deal scenario be so damaging . Well, because the uk would face tariffs at wto levels on its good exports to the eu and would in turn apply them to the eu exports to britain although the tariff levels themselves are not so high we determined that the uk would have to inspect in value all crossborder trade and we assess the uk would move away from eu standards over time resulting in significantly increased barriers on goods. The scenario would be even worse for services. As a uk Service Expert would have only access to eu 27 markets on the basis of the limited Market Access provided the wto and not the Single Market enhanced virtually friction free access it has now. While the no deal scenario is by far the worst scenario the uk would be worse off in nearly all trade scenarios we considered as compared to the status of the member. Free trade agreement with the eu, second scenario, essentially the uk is seeking is modestly better and some pay Percentage Points of growth after ten years compared to the wto baseline. Fta would prevent increase in tariffs and however as in the wto scenario such an fta would nonetheless involve a host of nonTariff Barriers to trade with custom tracks to verify standards. Would a Free Trade Agreement with the us should only be possible would be able to substitute for the uks preferential access to the eu . Our analysis suggests that it would not. Us uk fta would be for percentage gross better than the baseline and the significantly worse for the uk than the equivalent fta might be the eu, largely because existing levels of goods and Services Trade the us and the uk are significant but substantially less the uk and its european neighbors. For the us moreover the value of an fta the uk alone is negligible. It would provide zeropoint to Percentage Points of gain for the larger us economy. The only truly beneficial trade scenario for the uk that we found would be a trilateral uk, eu, us agreement much like the t tip might have been. We found the t tip scenario would be seven points for gdp better than the wto lines. With the uk get preferential access to both the us and eu marketplaces. One reason for this outcome being so good is that in addition the eu and the us themselves would benefit economically and the full effect and enhance growth from the two larger economy would help the uk. However, we fully recognize that a t tip like arrangement is seen as very unlikely in the current political environment on both sides of the atlantic. As i mentioned we assessed other scenarios including a transitional arrangement for norway, swiss and turkish mode models. The transitional arrangements would be good economically for the uk for as long as the nation remained within a Single Market but Economic Uncertainty would hurt investors. The norway, swiss and turkish models would apply lower trade barriers which would be good for Economic Growth will come with a significant loss of uk sovereignty over regulations and standards insignificant budgetary contributions from the uk to the eu. After trained to to create other scenarios for examination after the brexit negotiations. Chapter four of our study is based on application as i mentioned at the out at the social science of game theory. Our aim in the methodology was to create a better understanding of how a wide variety of structural fact yours are influencing the contours that now come at the brexit negotiations. In particular, game theory helps explain why the e. U. Sought first to settle the divorce settlement before moving on to discussions of the future relationships. And why the decision not to move to phase two talks in the future relationship is so important to the u. K. By using leverage to commit britain to painful terms of financial settlement before entering into trade negotiations, and the e. U. Sought to discourage other would be leaders, which reassesses the e. U. Top priority from this standpoint, the approach could be seen as the zerosum strategy in which airplanes when they can show the u. K. This is pure game three to pick apart your opinion of these since all Member States have more from the core to offer to match therefore would be likely to backfire. Its also a sensible strategy for the u. K. To seek to broaden the negotiation beyond the issues as soon as possible as the more issues on the table will help arrange positive tradeoffs. This explains why Prime Minister may make the commitment in florence a couple months ago to pay its obligations as a member rather than put them on the negotiating table. Finally in the chapter we assess finally this study we assess the u. S. Interest in the brexit trained to process the core u. S. Economic interests are not at stake. The only scenario make salmon that have a Material Impact on the u. S. Economy and a positive one with the trilateral lake outcome, which seems a distant prospect for now. But the u. S. Will miss the loss of the pragmatic generally pragmatic British Voice in e. U. Economic policy in its first direct investment by american firms in britain and british investors in the u. S. Is concerned from the data it appears to be more motivated by domestic Economic Opportunities and trade arrangements. We therefore conclude that the baker u. S. Stake in brexit is its potential impact on european decisionmaking where the u. S. Properly worries about political and Security Issues and on European Cohesion more generally. The worst outcome for the u. S. Would be a brexit led to a greater disintegration of the european construction, which i might add would be good for the u. K. Either. As a previous europe study exporting the detail in the aftermath, the Political Security structures will have to make fun to ensure common interests most likely by strengthening nato unity relationships. To sum up the overriding message from our study is in the best interest of the u. K. Into a lesser extent the e. U. To achieve some sort of open trade in the relationship post brexit. The big challenge for the Brexit Brexit negotiations around trade are likely to be the complications of coming up with such an agreement. A common position between the two parties will be difficult, particularly if the two parties adopt the conflict in negotiations of positive sum game versus negative and thats why in the mood to phase two is so important. In public posts ive have declared their intent to have a positive partnership, but if the different interests and aspirations lead the u. K. To walk away from the table without a future deal would be significant, this is likely to post a number of political challenges for the u. S. As well. The Common Ground for the u. K. And e. U. Is the fact that no deal option would be damaging to all parties come and try to the worstcase option could get the top of the agendas for the u. K. And the u. S. The economic talks. To me these are the highlights. Howard, fred and i look forward to our discussion in michelles comment and look forward to moving on to our discussion. Thank you. Thank you. Im going to get the member of our panel an opportunity to get her impression of days. Do the reports of conclusions align with your expectations . Youve been looking at brexit now in talking about this for a while. Did this cement would you let potter did this come out . That is a great question and besides recommending the report because i would start off by saying britain came out a transactional view of europe and so this is a transactional report. The reports conclusion no brexit outcome is the best scenario versus no deal is the most costly. I think accords with what most reports and analyses have concluded, including her majestys treasury, think tanks and others and from the sense this is one of the worst and best options, i would concur. But i else a ring that it emphasizes Something Else which is the british economy itself is very unbalanced from a heavily geared and waited towards service isnt so within britain itself, there is a differential impact. The city of london is deeply concerned about Financial Services. I think we need to unpack the difference between trading goods versus trade in services and that is very important here. But i think the report tells us something very important that tends to be forgotten in the price. The first thing as the report points out, the sequential nature of the agreement being in three phases really puts the advantages to the e. U. Over the u. K. The u. K. Wanted to simultaneous and that argument. I would point out the report turns out and says first of all we need the terms of the u. K. Exit, which had just been agreed upon and so does transcend chile this week. The second issue, which is framed differently in the press, but the second stage is the establishment of the framework for a future relationship. Thats not a trade deal. Thats the framework of the third issue is establishment of the necessary transitional arrangement on this report lays out clearly by this sequence and if its the e. U. Relative to the u. K. And also highlights the asymmetrical nature of these negotiations, the leverage goes to the e. U. I would also point out by putting up all of these different scenarios, it actually really helps us differentiate some name not always clear to many audiences that his distinction